Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 15
PETITIONER:
INDIAN BANK
Vs.
RESPONDENT:
K. USHA & ANR. ETC. ETC.
DATE OF JUDGMENT: 26/01/1998
BENCH:
S.B. MAJMUDAR, M. JAGANNADHA RAO
ACT:
HEADNOTE:
JUDGMENT:
THE 28TH DAY OF JANUARY, 1998
Present:
Hon’ble Mr. Justice S.B. Majmudar
Hon’ble Mr. Justice M. Jagannadha Rao
N. B. Shetye, Sr. Adv., Ambrish Kumar, Adv. with him for the
appellant in C.A. No. 3619/93
Ambrish Kumar, Adv. for the appellant
Ms. Indira Jaisingh, Sr. Adv. Sudarsh Menon, Adv. with her
for the Respondents.
J U D G M E N T
The following Judgment of the Court was delivered.
W I T H
[Civil Appeal Nos. 3620; 3621; 3623; 3624 and 3625 of 1993;
Civil Appeal No. 481 of 1998 (arising out of S.L. P. (C) No.
11171 of 1994); and Civil Appeal No 480 of 1998 (arising out
of S.L. P. (C) No. 11823 of 1994)]
S. B. Majmudar, J.
Leave granted in Special leave petitions.
By consent of learned advocates appearing for
contesting parties this group of nine appeals was heard
finally and is being disposed of by this common judgment.
The common appellant, Indian Bank, in this group of
appeals has brought in challenge the judgment and orders of
Division Benches of Madras High Court allowing writ
petitions of the respondents concerned who are the heirs and
legal representatives of deceased employees of Bank of
Thanjavur limited which was amalgamated with the appellant-
bank with effect from 20th February 1990 in accordance with
the Scheme of Amalgamation framed under Section 45 of the
Banking Regulation Act, 1949 (hereinafter referred to as
’the Act’). The respondents concerned had sought
compassionate appointments from the appellant-bank on the
ground that they were the heirs and legal representatives of
the deceased employees of Thanjavur Bank ( hereinafter
referred to as ’the transferor bank’) whose assets and
liabilities were taken over by the appellant-bank,
hereinafter referred to as ’the transferee bank’ for the
sake of convenience. The claim of the respondents for such
appointments was based on an agreement entered into between
the recognised Union of the employees of the transferor bank
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 15
in the year 1982 with the management of the transferor bank
under Section 2(p) of the Industrial Disputes Act, 1947
(hereinafter referred to as ’the I.D. Act’) The said
settlement was not arrived at during conciliation
proceedings, hence it remained binding only on the parties
to the said settlement, namely, the Union of employees of
transferor bank on the one hand and the management of the
transferor bank on the other. As per the said settlement a
scheme of compassionate appointment to be given to the
eligible heirs of deceased employees of transferor bank who
died in harness was evolved. The respondents’ contention was
that the said settlement remained binding to the transferee
bank as the successor bank which had taken over assets and
liabilities of the transferor bank pursuant to the order of
amalgamation. The appellant transferee bank refused to
entertain the said claims. That resulted in diverse writ
petitions by the respondents before the High Court. The High
Court took the view that the respondents were entitled to
get the benefit of the said settlement which was binding not
only on the transferor bank which was a party to the
settlement but also on its successor-in -interest, namely,
the appellant-bank and as the appellant-bank had rejected
the request of the respondents by the impugned judgments,
writs of mandamus were issued to the appellant-bank to grant
appointments on compassionate ground to the concerned
respondent-writ petitioners. Having obtained special leave
to appeal under Article 136 of the Constitution of India
these appeals have been moved by the appellant-bank
challenging the aforesaid decisions rendered by the High
Court.
It may be stated that earlier seven Special Leave
Petitions arising out of a Common judgment of the Division
Bench of the High Court in writ appeals confirming decisions
of the learned Single Judge were taken up for consideration
by this Court and while granting leave the prayer for stay
was refused. We are informed that as there was no stay of
the impugned orders of the High Court pending these appeals
the respondents concerned have already been appointed to the
respective posts which they are holding and are working as
employees of the appellant-bank. However it was brought to
our notice by learned senior counsel for the appellant that
the said appointments were given by the appellant subject to
the result of these appeals and they will, therefore, have
to abide by the present decision of ours.
In support of these appeals learned senior counsel,
Shri N. B. Shetye, who appeared in Civil Appeal No. 3619 of
1993 which was taken up as a lead case and Shri Ambrish
Kumar, learned counsel for the appellant-bank in the rest of
the appeals raised for our consideration the following
contentions:
1. The Scheme of Amalgamation limits the liability of the
transferor bank only to the extent provided in Clause
10 of the Scheme of Amalgamation which pertains to the
then existing employees of the transferor bank who were
taken over by the transferee bank and the said scheme
did not cover the transferor bank’s liability under the
settlement to provide compassionate appointments to the
heirs of its deceased employees who might have died in
harness an consequently the High Court was in error in
issuing mandamus to the appellant to absorb all these
respondents in service of the bank.
2. In any case the settlement of 1982 arrived at between
the management of the transferor bank and the Union of
its employee could only bind the parties to the
settlement as per Section 18(1) of the I.D. Act and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 15
could not be enforced against the successor-bank,
namely the appellant-bank.
3. In any view of the matter the High court could not have
issued mandamus to the appellant- bank to appoint the
concerned respondents even if they were found to be
eligible to get such employment under the Scheme, and
on the basis of settlement of 1982, without first
ascertaining whether there were vacancies on which such
persons could be accommodated and it should have been
left to the appellant - bank in any case to consider
this aspect of the matter and even on that ground the
final orders passed by the High Court in favour of the
respondents cannot be sustained.
Learned Senior counsel for the respondents, Ms. Indira
Jaisingh, on the other hand, while refuting these
submissions contended that on a correct interpretation of
Section 45 of the Act and scheme found thereunder it has to
be held that none of the provisions thereof gave any
contrary indication in connection with the employment to be
offered on compassionate grounds to the heirs of the
deceased employees of transferor bank and consequently the
relevant clauses of the Scheme on which the appellant-bank
relies would not cut across the scope and ambit of the
settlement entered into by the predecessor-bank, namely, the
transferor bank with its own employees through their union.
She further submitted that on a conjoint reading of Section
2 of the Act and Section 19(1) (d) of the Specific Relief
Act such settlement would be binding on the successor-bank
namely, the appellant-bank even apart from the non-
applicability of Section 18(3) of the I.D. Act in this
connection. It was also vehemently contended by learned
senior counsel for the respondents that even if two views
are possible on the construction of relevant provisions of
the Scheme and Section 45 of the Act, a construction which
fructifies the benevolent scheme underlying the settlement
being a welfare measure deserves to be accepted and the
contrary construction which stultifies such a benevolent and
a labour welfare provision should not be accepted. She
lastly submitted that so far as the third contention of the
learned senior counsel for the appellant-bank is concerned
it was the appellant-bank itself which requested the High
Court to decide the question on merits by placing
appropriate material before it and as it had already
rejected the claims of the respondents there was no question
of the High Court calling upon the appellant to re-consider
the matter on the peculiar facts of this case and especially
when it was not the contention of the appellant bank before
the High Court at any time either before the learned Single
Judge or in writ appeals or even in other writ petitions
that there were no vacancies available with the bank to
absorb the respondents if they were otherwise eligible to be
so absorbed and hence even the third contention does not
deserve to be accepted.
We shall deal with the aforesaid three contentions
seriatim.
Contention No. 1
At the outset we must look at the relevant provisions
of the Act under which the scheme of Amalgamation saw the
light of the day. The aforesaid Scheme was promulgated under
the provisions of the Act which was enacted in 1949 as Act
10 of 1949 by the Central legislature with a view to
consolidate and amend the law relating to banking. The Act
sought to regulate the business of banking companies and
gave wide powers to the Reserve bank of India to control and
monitor the same. Various regulatory provisions were made in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 15
connection with the working of commercial banks covered by
the sweep of the Act. During the working of the Act after
its enactment in 1949 it was found that the working of some
of the banking companies was not upto the mark and the
situation might arise during its commercial existence where
it would be found to have reached the point of bankruptcy.
In order to deal with such sick commercial banks covered by
the Act the legislature by Act 37 of 1960 inserted Section
45 with its relevant sub-sections empowering the Reserve
Bank to apply to the Central Government for an order of
moratorium in respect of such banking companies. During the
period of moratorium of such a banking company the Reserve
Bank was authorised, on being satisfied about the existence
of Various conditions contemplated by Clauses (a)) to (d) of
Sub-section (4) of Section 45, to prepare a scheme for the
reconstruction of the banking company, or for the
amalgamation of the baning company with any other banking
institution. As the transferor bank in the present case had
reached nadir of its financial commitments and functioning,
a moratorium for it was ordered by the Central Government at
the behest of the Reserve Bank as per Section 45 Sub-section
(1) of the Act and i was during the period of moratorium of
the transferor bank that a Scheme of Amalgamation of the
transferor bank with the appellant transferee bank was
promulgated by the Reserve Bank. The said scheme was
sanctioned by the Central Government as per sub-section 7 of
Section 45 with effect from 20th February 1990. Naturally
the question arose as to what was to happen to the erstwhile
employees of the transferor bank, whose assets and 11
abilities were being taken over as provided in the scheme,
by the transferee bank. The provision regarding the same was
incorporated in Clause 10 of the Scheme while Clause 2 of
the scheme dealt with transfer of assets and liabilities of
the transferor bank to the transferee bank as indicated
therein.
It is in the light of the aforesaid statutory set up
and the resultant amalgamation scheme and its provisions
regarding the matters in issue that the first contention of
the learned senior counsel for the appellant will have to be
examined. When we turn to the relevant clauses of the Scheme
of Amalgamation we find three clauses of the Scheme of
Amalgamation we find three clauses of the Scheme which have
an impact on the decision of the present controversy. The
said clauses read as under:
" CLAUSE- 2: As from the date which
the Central Government may specify
for this purpose under sub-section
(7) of Section 45 of the said Act,
(hereinafter referred to as the
prescribed date ) all rights,
powers, claims, demands, interest,
authorities, privileges, benefits,
assets and immovables including
premises subject to all incidents
of tenure and to the rents and
other sums of money and convent
reserved by or contained in the
leases or agreement under which
they are held, all office
furniture, loose equipment, plant
apparatus and appliance, books
papers stocks of stationery, other
stocks and stores, all investments
in stocks, shares and securities,
all bills receivable in hand and in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 15
transit, all cash in hand and on
current or deposit account
(including money at all or short
notice) with banks bullion, all
book debts, mortgage debts and
other debts with the benefit of
securities, or any guarantee
therefor, all other if any,
property rights and assets benefit
of all guarantees in connection;
with the business of the transferor
bank shall, subject to the other
provisions of the this scheme,
stand transferred to and become the
properties and assets of the
transferee bank, and as from the
prescribed data all the
liabilities, duties shall be and
shall become the liabilities,
duties and obligations of the
transferee bank to the tent and in
the matter provided hereinafter.
CLAUSE - 10: All the employees of
the transferor bank shall continue
in service and be deemed to have
been appointed by the transferee
bank at the same remuneration and
on the same terms & conditions of
service as were applicable to such
employees immediately before the
close of business on 19th August,
1989. Provided that the employees
of the transferor bank who have, by
notice in writing given to the
transferor or the transferee bank
at any time before the expiry of 1
month next following the date on
which this scheme has been
sanctioned by the Central
Government intimated their
intention of not becoming employees
of the transferee bank, shall be
entitled to the payment of such
compensation, if any, under the
provisions of the Industrial
Disputes Act, 1947 and such
pension, gratuity provident fund
and other retirement benefits as
may be ordinarily admissible under
the rules of authorisations of the
transferor bank immediately before
the close of business on 19th
August, 1989. Provided further that
the transferee bank shall in
respect of the employees of the
transferor bank who are deemed to
have been appointed as employees of
the transferee bank be deemed also
to have taken over the liability
for them of retrenchment
compensation in the event of their
being retrenched while in the
service of the transferee bank on
the basis that their service has
been continued and has not been
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 15
interrupted by their transfer to
the transferee bank.
CLAUSE - 16: If any doubt arises in
interpreting any of the provisions
of this Scheme, the matter shall be
referred to the Reserve Bank of
India and its opinion shall be
conclusive and binding on both the
transferee and transferor banks,
and also on all the members,
depositors and other creditors and
employees of each of these banks
and on any other person having any
rights or liability in relation to
any of these banks."
We shall first see the scope and ambit of Clause 2. the
first part of the said clause provides for the transfer of
all assets and properties of the transferor bank to the
transferee bank as it provides transfer of all rights,
powers, claims, demands, interests, authorities, privileges,
benefits, assets and immovables including premises and also
including all furniture and other stock investments etc.
This part of the clause refers to the asset side of the .
Along with the transfer of these assets and the rights of
the transferor bank in favour of the transferee bank the
latter part of the clause lays down, after observing that
these properties and assets will become the properties and
assets of the transferee bank as and from the prescribed
date that all the liabilities, duties and obligations of the
transferor bank shall be and shall become the liabilities,
duties and obligations of the transferee bank to the extent
and in the manner provided thereinafter meaning thereby in
the subsequent clauses of the scheme. Relying on the second
part of Clauses of the Scheme. Relying on the second part of
clause 2 learned senior counsel for the appellant submitted
that second part of Clause 2 is independent of the first
part and, therefore, when t deals with the transmission of
liabilities, duties and obligations of the transferor bank
to the transferee bank the said transmission shall be
limited only to the extent to which the subsequent clauses
of the Scheme would provide for such transmission and
nothing more. it was, therefore, submitted that whatever may
be the liability or contractual obligation of the transferor
bank, under the 2(p) Settlement of 1982 with the Union of
its employees, such liability or obligation did not get
transmitted to the transferee-bank as the latter part of the
Scheme did not provide for any such obligation or liability
being incurred by the transferee bank. It can, therefore,
be said that to that extent no such liability or obligation
was undertaken by the transferee bank. In this connection
strong reliance was placed on Clause 10 of the Scheme which
only concerned the then existing employees of the transferor
bank on the appointed date whose services were taken over by
the transferee bank. Therefore, in connection with the ex-
employees of the transferor bank only limited provision was
made in Clause 10 and no provision was made regarding
deceased employees and their heirs and how the heirs of such
deceased employees of the transferor bank were to be dealt
with. in this connection it was also submitted, placing
reliance on Sections 45(9) and 45(14) of the Act, that the
Scheme by incorporating clause 10 of the Scheme of
Amalgamation had and a contrary provision on this topic of
granting compassionate appointments to the heirs of the
deceased employees of the transferor bank who might have
died in harness and hence this contrary provision in the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 15
Scheme superseded the liability flowing from the said
Settlement entered into by the transferor bank in 1982 with
the Union of its erstwhile employees.
It must at once be stated that on first blush the
contention of learned senior counsel for the appellant
appears attractive but on a closer scrutiny it falls through
as we will presently show, Clause 2 of the Scheme has to be
read in the light of Section 45(9) which reads as under:
"45(9). On and from the date of the
coming into operation of, or as the
case may be, the date specified in
this behalf in , the scheme shall
be substituted; the properties and
assets of the banking company
shall, by virtue of and to the
extent provided in the scheme,
stand transferred to, and vest in,
and the liabilities of the banking
company shall, by virtue of and to
the extent provided in the scheme,
stand transferred to, and become
the liabilities of, the transferee
bank."
The said sub-section obviously deals with a provision to be
incorporated in the Scheme regarding properties and assets
of the banking company which are to be transferred under the
Scheme to the transferee bank. The said clause enables the
Scheme to provide the extent to which such properties and
assets of the transferor company will get transferred to the
transferee bank and would vest in it. And then follows the
second part of sub-section (9) of Section 45 which deals
with liabilities of the banking company and makes an
identical provision that such liabilities of the transferor
bank also by virtue of and to the extent provided in the
Scheme would stand transferred to an become the liabilities
of the transferee bank. Thus the said sub-section (9) of
Section 45 of the Act enables the Scheme-making authority to
provide in that Scheme the extent to which the properties
and assets of the banking company can be transferred and
corresponding liabilities attached to such properties and
assets of transferor company also can get vested in the
transferee company. it is obvious that when assets of the
transferor company are being transferred and are to vest in
the transferee company under the Scheme, it could not be a
one-way traffic. Hence the corresponding liabilities of the
banking company attaching to such assets would also have to
travel as a result of the said transmission of the
properties and assets of the transferor company to the
transferee company to the extent provided in the Scheme. In
the context in which the Word ’liabilities’ is employed by
the Legislature in Section 45 sub-section (9) of the Act it
has to be held that ’liabilities’ as contemplated therein
are the monetary liabilities of the transferee company in
connection with the properties of the transferor company
which stand transferred and have vested in the transferee
company as a result of the Scheme of Amalgamation. For
deciding the scope and ambit of such financial liabilities
what is expressly provided in the Scheme in the connection
has to be kept in view and only such liabilities would get
attached to the transferee company. Now it is obvious that
the claim of the respondents flows from 2(p) Settlement
under I.D. Act entered into by the transferor company its
erstwhile employees through their Union and the liability
arising under Settlement which is sought to be enforced
against the appellant-bank. Obviously is not a monetary
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 15
liability or a crystallised liability. But it is purely a
contractual liability having a binding legal force under
Section 18(1) of the I.D. Act. Such liability is not within
the sweep of sub-section, (9) of Section 45, which as we
have seen earlier, will have limited connotation of being
financial liability of the transferor bank which would
travel and get transmitted to the transferee bank along with
the properties and assets of the transferor bank which, as
indicated in the Scheme, would vest in the transferee bank,
Section 45(9), therefore, cannot render any assistance to
the appellant-bank. On a parity of reasoning, therefore, the
terms ’liabilities, duties and obligations’ as employed in
the second part of Clause 2 of the Scheme will get color
from the Scheme of Section 45(9) and have to be read down as
referring to financial liabilities obligations and duties
pertaining to assets and properties transmitted to and
vested in the transferee-bank to the extent provided in the
Scheme. They will not take in their sweep any contractual
obligations dehors such transmitted assets and properties of
the transferor-bank. This is made clear when we turn to the
first part of Clause 2 which has provided for the
transmission of assets and rights of the transferor company
to the transferee company under the Scheme. There in a
detailed provision is made even about transfer of office
furniture, loose equipment, plant apparatus and appliances,
books, papers, stocks of stationery, other stocks and stores
etc. After cataloguing these assets for transmission to the
transferee company the Second part which is complementary to
the first part also deals with the transmission of
liabilities, duties and obligations of the transferor bank.
Therefore, the words ’liabilities, duties and obligations of
transferor bank’ would also necessarily have a nexus or
connection with the assets and rights which are contemplated
to be transferred to the transferee-bank. The second part of
Claused 2 cannot be read independently of the first part and
in isolation. If learned counsel for the appellant were
right in their contention then second part of the Clause 2
would have been enacted separately as an independent clause.
The second part of Clause 2, therefore, cannot be held to be
representing a contrary intention or provision of not
undertaking the obligation of the transferor-bank in
connection with its contractual liability under 2(p)
settlement with the Union of its employees in connection
with the topic of providing compassionate appointments to
the heirs of its deceased employees.
That takes us to the consideration of sub-section (14)
of Section 45 on which strong reliance was placed by learned
senior counsel for the appellant. The said sub-section 14
reads as under:
"45(14). The provisions of this
section and of any scheme made
under it shall have effect
notwithstanding anything to the
contrary contained in any other
provisions of this Act or in any
other law or any agreement, award
or other instrument for the time
being in force."
A mere look at the said provision shows that before it can
apply there must be a provision on a given topic either in
any the other clauses of Section 45 or any scheme framed
thereunder and such a provision must be contrary to any
other provision on the same topic as found in any other part
of the Act or in any other law or award or instrument for
the time being in force. Thus on the same topic there must
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 15
be two contradictory provisions. One, on the one hand in the
Scheme or any-part of Section 45 and second, on the other
hand on the same topic expressing an entirely different and
contrary intention in any other part of the Act or in any
law or any other award or instrument for the time being in
force. The topic for consideration around which the
controversy revolves in the present cases is the question of
providing compassionate appointments to the eligible heirs
of deceased employees of transferor-bank who died in harness
and who claimed such appointments under the Settlement of
1982 from the tranferee-bank. On this topic or question
there must be an express provision in the Scheme or Section
45 of the Act and such express provision should be contrary
to and different from the provision made on the same
question and topic by any other part of the Act or in any
other law, agreement, award or instrument for the time being
in force. So far as this aspect is concerned learned counsel
for the appellant pitched their faith only on the second
part of Clause 2 and Clause 10 for submitting that there is
such a contrary provision in the Scheme which would govern
the present controversy. We have already seen that second
part of Clause 2 does not reflect such a contrary provision.
So far as Clause 10 is concerned it was submitted that
it is a complete code in itself which deals with the topic
of the Service conditions of the erstwhile employees of the
transferor bank and as Clause 10 has not provided anything
regarding deceased employees of the transferor bank and
about the rights and claims of their eligible heirs who
could claim appointments on compassionate ground as their
bread-winners had died in harness it can be said that by
necessary implication Clause 10 had excluded such a
liability on the part of the transferee bank in discharging
the obligations flowing from the 2(p) settlement entered
into by the transferor bank with its erstwhile Employees’
Union and consequently Section 45 sub-section (14) of the
Act can set attracted on the facts of the present case. It
is not possible to agree with this contention. The reasons
in obvious. Clause 10 on its own wordings deals only with
the existing ex-employees of the transferor bank who might
be available for being continued in service of the
transferee bank on the date of amalgamation. This clause has
nothing to do with the deceased ex-employees of the
transferor bank. Learned counsel for the appellant also
agreed to this factual position as emerging from the express
terms of Clause 10. But it was submitted that by necessary
implication it would mean that deceased ex-employees of the
transferor bank were not under contemplation nor their heirs
were to be considered by the transferee bank for enabling
such heirs the deceased ex-employees of the transferor bank
to have any claim against the transferee bank. We fail to
appreciate how this contention can support the appellant’s
case under Section 45 sub-section (14) of the Act. Once it
is held and must be held, on the express language of clause
10 which never even whispered about the deceased ex-
employees of the transferor bank, that the topic regarding
giving compassionate appointments to the heirs and legal
representatives of the ex-employees of the transferor bank
who might have died in harness during the time the
transferor bank was operating is not covered by Claused 10.
in other words on this topic no provision is made in clause
10 of the Scheme either expressly or by necessary
implication. Once that conclusion is reached sub-section
(14) of Section 45 of the Act gets out of picture. As
observed earlier before sub-section (14) of section 45 cab
be pressed in service it must be shown that there is an
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 15
express provision on a given topic of liability in the
scheme or in the Section and such express provision should
be irreconcilable with and be in express conflict or be
repugnant to any contrary express provision found in any
other instrument having the force of the law or in any part
of the Act or any other law or award. In the present case we
are concerned with the agreement under Section 2(p) of the
I.D. Act entered into in 1982 by the transferor bank with
the Union of its employees and it is that agreement which
provided for giving compassionate appointments to the heirs
of the employees dying in harness. The aforesaid provision
contained in the 2(p) Settlement is not in conflict with any
other contrary express provision in the Scheme especially
Clause 10 thereof. In fact the entire Scheme especially
Clause 10 thereof. In fact the entire Scheme is silent on
this topic. It is obvious that a provision which is silent
on a topic cannot be said to have laid down any intention
contrary to the one as reflected by any other express
provision contained in any other instrument or agreement.
Repugnancy or conflict as contemplated by Sub-section 914)
of Section 45 can arise only when on the same topic there
are two contradictory express provisions. One in the Scheme
and another in the agreement. Then only the provision in the
Scheme would override such contrary express, provision in
the agreement. As none of the clauses in the Scheme of
Amalgamation could be pointed out by the learned counsel for
the appellant for culling out such express conflict on the
topic of compassionate appointments to be granted to the
heirs of the deceased ex-employees of the transferor-bank
reliance placed by the learned counsel for the appellant on
Section 45 sub-section (14) of the Act also cannot be of
any assistance to them.
In this connection we must also have to keep in view
the settled legal position that while construing any scheme
in connection with the question of providing compassionate
appointments to the heirs of deceased employee who was the
bread-winner and whose exit had left his heirs in the lurch
and in precarious and vulnerable economic position a
construction which fructifies such a welfare measure has to
be preferred as compared to another construction which
stultifies such a benevolent welfare measure. In this
connection learned senior counsel for the respondents was
right when she relied upon a decision of this court in the
case of workmen of Messrs Binny Ltd. V. Management of Binny
Ltd. and another [(1985) 4 SCC 325]. In that case a Bench of
three learned judges of this Court speaking through Khalid,
J., had to consider he provisions of a Scheme of
Amalgamation of companies concerned under the orders of the
High Court. While interpreting the scheme of amalgamation
which had an impact on the question of welfare of employees,
the following observations were made in para 9 of the Report
" ... It is a tribe law that in
matters of welfare legislation.
especially involving labour, the
terms of contracts and the
provisions of law should be
liberally construed in favour of
the weak...."
Keeping in view the aforesaid settled rule of construction
when we consider the scope and ambit of clauses 2 and 10 of
the Scheme we do not find any thing provided therein which
would of necessity contraindicate the foisting of liability
and obligation on the transferee-bank in connection with the
contractual obligation undertaken by its predecessor-in-
interest, namely, the transferor-bank under the 2(p)
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 15
Settlement of 1982 in connection with the question of
providing compassionate appointment to the heirs of deceased
bread-winner who might have died in harness.
Learned senior Counsel for the appellant in support of
his first contention invited our attention to a three Judge
Bench decision of this Court in the case of Canara Bank,
Bangalore v. M.S. Jasra and others [(1992) 2 SCC 484] for
submitting that the schemes framed under the Act as per
Section 45 of the Act must be given their full effect ad
they are comprehensive in nature. It must be kept in view
that in the said decision this Court was not concerned with
the examination of the question whether the successor bank,
namely, the transferee- bank under the scheme of
Amalgamation had undertaken the liabilities of transferor-
bank or not. The question in that case was that when the
liabilities of the transferor bank in connection with the
service conditions of its existing employees were taken over
by the transferee- bank, would such taking over entitle the
erstwhile employees of the transferor - bank to claim better
rights from the transferee-bank than what they had already
got by way of existing service conditions at the time of
amalgamation. In that case Lakshmi commercial Bank was
amalgamated with Canara Bank. the erstwhile employees of the
transferor bank claimed age of superannuation to be 60 years
instead of 58 years which was the age of superannuation in
the transferee-bank, namely, the Canara Bank. Rejecting such
a claim it was held by this Court that as laid down by sub-
section (5) of section 45 the Scheme was to contain
provisions in connection with the service conditions of the
employees of the transferor-bank as laid down therein and
such a scheme so framed under sub-section (4), therefore,
may contain provisions for all or any of the matters
specified in sub-section (5) so that it enables all or any
of the specified matters to be provided in the scheme
prepared under sub-section (4) and the matters specified in
the several clauses in sub-section (5) do not automatically
get incorporated in such scheme unless the scheme
specifically includes any such matter. We fail to appreciate
how the said decision can be of any assistance to the
learned senior counsel for the appellant on the facts of the
present case. If the scheme deals with a topic and if it is
comprehensive enough then it would rule out any contrary
provision found elsewhere and express provision of the
scheme only has to be given effect to. In the facts of the
present case, as seen earlier, neither clause 2 nor clause
10 of the Scheme represents any provision regarding
compassionate appointments to be given to the heirs of the
erstwhile deceased employees of the transferor-bank. Hence
there is no occasion for the said clauses of the Scheme to
project any contrary express provision to override r to
supersede the provisions contained in 2(p) Settlement which
was binding on the transferee-bank would remain operative to
the extent benefit thereunder is available to the concerned
claimants like the respondents herein. In the light of the
relevant clauses of the Amalgamation Scheme, therefore, it
is not possible to agree with the contention of the learned
senior counsel for the appellant that no liability could be
imposed on the appellant-bank so far as the claim of the
respondents for compassionate appointments was concerned.
The first contention, Hereford, stands rejected.
Contention No. 2
That takes us to the consideration of the second
contention. It is true that the settlement under Section
2(p) of the I.D. Act was entered into not by the appellant-
bank but by the transferor-bank with the union of its
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 15
erstwhile employees. they were outsiders so far as the
transferee-bank is concerned. Such 2(p) Settlement which was
not arrived at during conciliation could not be binding on
the successor or transferee management as Section 18 sub-
section (3) of the I. D. Act would not get attracted to such
a settlement. There cannot be any dispute on this aspect.
Further it cannot also be gainsaid that under Section 18
sub-section (1) of the I. D. Act such settlement was binding
at least on the parties to the settlement, namely, ex-
workmen of the transferor-bank on the one hand and the
management of the transferee- bank on the other. That
consequence squarely flows from Section 18 sub-section (1)
of the I. D. Act which reads as under:
"18. Persons on whom settlement and
awards are binding .- (1) A
settlement arrived at by agreement
between the employer and workman
otherwise than in the course of
conciliation proceeding shall be
binding on the parties to the
agreement."
Till the time of amalgamation, therefore, the said
settlement remained operative and binding on the transferor-
bank being a party thereto. That was the situation on 19th
June 1990, a day prior to the date on which the Scheme of
Amalgamation saw the light of the day, that is, w.e.f. 20th
June 1990. Thus it was an operative contractual obligation
of the transferor-bank flowing from the settlement which had
legal binding force qua it. Question is whether the binding
effect of such a settlement could be visited on the
transferee or successor bank, namely, the appellant. Section
18 sub-section (3) of the I. D. Act being out of picture by
itself the said settlement under Section 2(p) of the I.D.
Act which was binding under Section 18(1) on the transferor-
bank could not have been pressed in service against the
transferee-bank which is the successor bank and which was
obviously not a party to the said settlement. However, it is
Section 2 of the Act which becomes operative in such a
situation. Section 2 reads as under:
"2. Application of other laws not
barred. The provisions of this Act
shall be in addition to, and not,
save as hereinafter expressly
provided, in derogation of the
Companies Act, 1956, and any other
law for the time being in force."
As clearly laid down therein the provisions of the Act will
not be in derogation of the Companies Act , 1956 or any
other law for the time being in force save and except as
expressly provided to the contrary in latter part of the
Act. The latter part of the Act obviously brings in its
sweep section 45 and its various sub sections. Therefore, if
any of the provisions of Section 45 or its sub-sections had
said anything expressly contrary in connection with the
binding effect, on the transferee-bank, of erstwhile
settlements entered into between the transferor-bank on the
one hand and its the then existing employees through their
Union on the other hand, the provisions of any other law for
the time being in force which foisted such an obligation on
the transferee bank would not remain operative and clicking.
However, as seen earlier, no provision in the Act and
especially in any of the clauses of Section 45 or even in
any of the clauses of the scheme of Amalgamation in the
present case could be effectively pressed in service by the
learned senior counsel for the appellant to cull out any
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 15
express provision contra- indicating the foisting of
liability under the settlement arrived at under Section 2(p)
of the I. D. Act by the transferor-bank with its erstwhile
employees on the topic of compassionate appointment. Hence
Section 2 of the Act had its full operation. Once Section 2
applied it brought in its wake section 19 of the specific
Relief Act, 1963 which obviously is a law in force. Section
19 provides for the relief against parties and persons
claiming under them by subsequent title and lays down.
’Except as otherwise provided by this Chapter, specific
performance of a contract may be enforced against - (a) ....
(b) ....... (c)........ (d) when a company has entered
into a contract and subsequently becomes amalgamated with
another company, the new company which arises out of the
amalgamation. It, therefore, becomes clear that apart from
Section 18 Sub-Section (3) of the I. D. Act the liability of
the transferee- bank to met the contractual obligation of
the transferor bank under the Settlement binding under
Section 1891) of the I. D. Act would remain squarely
attracted by virtue of Section 19 (d) of the Specific Relief
Act read with Section 2 of the Act. This is the view taken
by the High Court in the Impugned judgments which remains
well sustained on the conjoint operation of the 2(p)
Settlement of 1982, Section 2 of the Act and Section 19(d)
of the Specific Relief Act. The said legal effect flowing
from the aforesaid statutory provisions is not contra-
indicated by any express provisions in any part of the Act
or in any part of Section 45 or for that matter in any of
the clauses of the Scheme of Amalgamation. consequently the
appellant transferee-company which has emerged as an
amalgamated company as a result of the amalgamation with the
earlier company would be liable to meet the contractual
obligations flowing from the settlement binding on the
transferor - company and these contractual obligations which
could have been specifically enforced against the
transferor- company during the currency of the settlement
under Section 2(p) read with section 18 (1) of the I. D. Act
would get transmitted and foisted on the shoulders of the
appellant transferee-company on the combined operation of
Section 19(1) (d) of the Specific Relief Act and Section 2
of the Act. The second contention, therefore has to be
answered in the negative, in favour of the respondents and
against the appellant.
Contention No. 3
Now remains the consideration of the third contention.
Learned counsel for the appellant were right when they
contended that if the scheme for granting compassionate
appointments as per the rules and regulations of the
employer concerned expressly provides that such appointments
can be granted to the heirs of its deceased employees dying
in harness only if vacancies exist for absorbing them, then
the compassionate appointments could be granted only against
such vacancies and the Court cannot direct, by mandamus, to
create vacancies for that purpose if there are none. In this
connection they rightly invited out attention to a decision
of this Court in the case of Hindustan Aeronautics Ltd. V.
A. Radhika Thirumalai (Smt.) [(1996) 6 SCC 394]. However the
said decision cannot be of any avail to the appellant on the
facts of the present cases. The first reason is that it was
not the contention of the appellant before the High Court.
Either before the learned single Judge or in appeal or in
the writ petitions, the decisions wherein are challenged by
direct special leave petitions before us, that there are no
vacancies with the appellant-bank wherein the respondents
could be fitted in. In fact respondents are already employed
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 15
in these vacancies. Consequently the ratio of the aforesaid
decision cannot be applicable to the peculiar facts of these
cases. The appellant had already rejected the claim of the
respondents only on the plea that they had no legal right to
claim compassionate appointments being outsiders and heirs
of ex-employees of the transferor-bank who could not claim
any such appointments from the transferee-bank. It was not
the case of the appellant while rejecting their claims that
there were no vacancies where they could be fitted even
though they were eligible for such appointments. On these
acts, therefore, the High Court was perfectly justified in
issuing mandamus to the appellant-bank once the main defence
of the appellant was found to be unsustainable and which
view of the High Court is approved by us as discussed while
considering the aforesaid first two contentions. The second
reason why the aforesaid decision cannot be of any avail to
the appellant is that the appellant itself requested the
High Court to decide the question of eligibility of the
respondents on merits and it joined issue on this aspect
before the High Court. In this connection our attention was
invited by learned counsel for the appellant to para 17 of
the impugned judgment of the Division Bench which reads as
under:
"17. In these matters, the
applications of the writ
petitioners have not been
considered by the Bank and
excepting in one case the learned
Single Judge has directed such
consideration of the applications
by the Bank. We discussed the
matter with learned counsel on both
sides and suggested that the
eligibility of the writ petitioners
can be decided here itself if all
the relevant facts are placed
before us, as otherwise there may
be a fresh crop of writ petitions,
if ultimately the appellant- Bank
rejects the applications or some of
them on other grounds of non-
eligibility. Counsel agreed to this
course and placed all the facts
before Court, We will consider the
same in each case."
Thus the Division Bench of the High Court was invited by
learned counsel for the appellant themselves to do into the
question of merits of the eligibility of the respondents and
once the High Court found that their claim was wrongly
rejected by the appellant-Bank and especially when the
appellant-bank had not put forward the defence of non-
availability of vacancies no fault could be found with the
high Court when it issued mandamus to the appellant to grant
appointments to the concerned respondents. Hence on the
peculiar facts of this case the ratio of Hindustan
Aeronautics (Supra) cannot be of any assistance to the
appellant. The third contention also, therefore, stands
rejected.
As a result of the aforesaid discussion it must be held
that the impugned decisions of the High Court are well
sustained. The High Court was perfectly justified in
granting reliefs to the respondents. No case is made out for
our interference in these appeals. They therefore, fail and
are dismissed. There will be no order as to costs in the
facts and circumstances of the case.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 15